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Reporting by extractive companies on government payments: EU directive published in the official journal and US court suspends SEC rule

There have been developments in the US and the EU in relation to the implementation of requirements for reporting by extractive industries on government payments.

The new EU Directive (Directive 2013/34/EU) requiring the disclosure, on a project by project basis, of payments to governments by companies operating in the extractive (oil, gas and minerals) and logging industries has become effective by being published in the Official Journal of the European Union. Member States now have until 20 July 2015 to implement the Directive. There are no changes of substance to the Directive since the version published in April, but some reformatting means the relevant Article numbers have changed.

In the US, a summary judgment has been granted by the D.C. District Court in the case of American Petroleum Institute v. Securities and Exchange Commission, No. 12-1668 (D.D.C. 2013) suspending the SEC rule implementing new project by project reporting requirements for SEC registered companies. The decision was based on the SEC rule requiring public disclosure of all the information reported by companies and the fact that disclosure would be required even if it violated local law (the EU requirements also contain no exception from the disclosure requirement where to do so is prohibited by local law).

The US decision is important to issuers who are listed in both the US and EU. Under the EU Directive, such issuers will be exempt from complying with the EU regime if they comply with an "equivalent", ie the US, regime. The US decision leaves the issue of whether the US regime will be determined to be equivalent, and even it is eventually determined to be equivalent, the timing of that decision, uncertain.